Mike’s Monday Message: Giving USA Confirms 2022 FEP Decline in Giving
At AFP ICON earlier this year, I shared with attendees some troubling trends from the 2022 Q4 AFP Foundation for Philanthropy Fundraising Effectiveness Project (FEP) Report — the total number of donors once again declined, as it had for 5 out of the last 7 quarters, and for the first time in the last decade, total dollars had also declined.
Last week Giving USA announced in their Annual Report on Philanthropy for the Year 2022, a 3.4% (10.5% after adjusting for inflation) decline in charitable giving, confirming what we saw in the FEP report.
This decline comes on the heels of two record-breaking giving years in response to the COVID-19 pandemic and the temporary universal charitable deduction. Now however, economic uncertainty caused by inflation and large stock market drops, has reduced the ability of many to continue giving.
In fact, charitable giving, when adjusted for inflation, was down for individuals, foundations, bequests, and corporations, demonstrating the significant impact of the 8% inflation rate, a 40-year record high.
Individual giving was hit hardest by these economic pressures, showing the largest percentage decline in dollars donated. Individual giving has also been declining as a percentage of total giving for the last several years, reaching an all-time low of 64% in 2022.
All of these reductions in charitable giving have real impact on the nonprofit sector. Without these funds, organizations are not able to fulfil their missions and provide the services their communities need.
So, what can we do about this decline?
One thing you can do is encourage your representatives in Congress to support the Charitable Act, a bill which, if passed, would reinstate the universal charitable deduction, which expired at the end of 2021.
The universal charitable deduction allowed individuals who do not itemize deductions to deduct $300 ($600 for joint filers) of qualified charitable contributions from their taxes. While this deduction was in effect in 2020 and 2021, there was a near 11% increase in small donations in the $300-$600 range, however, there was a 5% decline in 2022, as the deduction was allowed to expire, demonstrating the impact tax policy can have on individual giving. Unfortunately, with the expiration of the deduction, 90% of Americans had no tax incentive to give last year.
The proposed Charitable Act aims to incentivize individual giving and reverse this decline in donations by reinstating and raising this deduction to $4,600 for individuals ($9,200 for joint filers).
But we need your help to get this bill passed! Take action today.
The new form on our website makes it easy for you to find your representatives and send them an email letting them know how important this bill is to your organization. Together as an AFP community, we have the power to influence these decisions and change these trends currently impacting our profession.
I hope you’ll join us in taking action now and during AFP’s Lobby Week in October!
Mike Geiger, MBA, CPA